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Future Value Calculations in Given Scenarios
To calculate the monthly payment that she is able to take from this fund, it is an annuity problem again with
Present value: 813,073.19
Interest rate: 10%
Number of periods: 30 years * 12 months = 360 periods
Solve for the annuity payment.
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Time Value of Money
What is the present value of $100,000 received in fifteen years with an annual
Discount rate of 5% discounted monthly?
a.) $25,000
b.) $48,102
c.) $47,310
d.) $207,893
15. A gallon of milk cost $3.59 today.
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NPV, Payback Period
PVIFA= Present Value Interest Factor for an Annuity
It can be read from tables or calculated using the following equations
PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%
We first calculate the Present value of $5,000
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Present value
The solution explains how to calculate the present value
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Net cash flow on sale of assets
Depreciation for 2 years = 38,700 X (20%+32%) = 20,124
Book value at the end of 2 years = 38,700-20,124 = 18,576
Sale price = 25,000
Gain on sale = 25,000-18,576 = 6,424
There will be tax on gain = 6,424 X 30% = 1,927.20
Net cash flow = sale price
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Economic Analysis: Net Present Value
497101 What would be the present value of an item that has a salvage value of $25,000 at the end of five years? What would be the present value of an item that has a salvage value of $25,000 at the end of five years?
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Assessing the time value of money
Assume that the appropriate interest rate for discounting is 8 percent, compounded quarterly. What is the present value today of the future distribution?
7. XYZ Corporation issues $1,000,000 of 9% bonds due in 20 years.
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Savings Comparison: Contribution or Interest Earned
Step1: Calculate the Future value of deposit $25,000 into a retirement savings account at a fixed rate of 7.5 % for 40 years
Future value= Present value *(1+rate of interest)^duration
=25000*(1+7.5%)^40
=$451106
Step 2 : To Find the present value
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Present Value of $10,000 with Varying Interest Rates
295598 Present Value of $10,000 with Varying Interest Rates What is the present value of $10,000 received
a. 12 years from today when the interest rate is 4% per year?
b. 20 years from today when the interest rate is 8% per year?